Korea leads gains on Asia-Pacific markets

Korean equities led gains in Asia-Pacific markets on Wednesday, posting their biggest one-day gain in seven weeks as shares in technology companies rallied and investors gained confidence from Wall Street’s overnight gains.

The FTSE Asia-Pacific index traded 1 per cent higher at 156.44 in late afternoon in Tokyo. The Kospi gained 5.9 per cent to 1,157.98 on its first day of trading this week after it was closed for the Lunar New Year.

Samsung Electronics shares jumped 10.5 per cent to Won488,500 and Hynix Semiconductor gained 15 per cent to Won8,060 as investors bet the chipmakers would benefit from Qimonda’s filing for insolvency last Friday. The news had bolstered Japan’s Elpida earlier this week.

Other large Korean blue-chip companies also rallied strongly, with Posco gaining 7.2 per cent to Won365,000 and Hyundai Motor rising 11.9 per cent to Won47,000.

The optimism came in spite of economic data from the US further displaying deterioration in the world’s largest economy. Consumer confidence in the US fell to a record low in January, while a closely watched reading of US house prices dropped at the fastest pace on record in November.

Banking shares across the region followed their US peers higher. Korea Exchange Bank rose 9 per cent to Won6,760, while Shinhan Finance rose 7.8 per cent to Won27,500 and Woori Finance rose 14.3 per cent to Won8,000.

Australian banks were in favour after data showed that inflation had dropped in the fourth quarter, raising expectations that interest rates would be cut further.

Commonwealth Bank of Australia gained 6.4 per cent to A$26.31, while ANZ Banking Group rose 6.5 per cent to A$13.21 and National Australia Bank increased 4.1 per cent to A$18.02.

The S&P/ASX 200 index gained 1.5 per cent to 3,495.5. Rio Tinto shares weighed on the broader index after it said it would consider selling equity to help repay $10bn of debt. Shares dropped 2.9 per cent to A$40.95.

In other company news in Australia, Boral, a producer of building materials, was forced to cut its profit guidance for the year to June due to the deterioration in the housing markets in Australia, the US and Asia. It now expects profits after tax to be around A$120m compared with its previous guidance of $200m.

Shares of the company dropped 15.4 per cent to A$3.45.

Japan’s Nikkei 225 gained 0.6 per cent to 8,106.29, while the Topix ended the day 0.1 per cent down at 804.33. Gains were muted following a strong rally on Tuesday.

Japan’s largest brokerage Nomura underperformed the market as investors sold the stock following its larger-than-expected loss in the third quarter.

Shares dropped 2.2 per cent to Y625. Mizuho Financial gained 1.3 per cent to Y233, while Mitsubishi UFJ Financial gained 1.2 per cent to Y503. Sumitomo Mitsui Financial gained 1.2 per cent to Y3,360. The bank said after the close of trading that its third-quarter profit dropped due in part to losses on its stock portfolio.

Seiko Epson lost 4.4 per cent to Y1,151 after it said it had to delay its earnings to investigate improper accounting practices at a subsidiary involving underreporting of expenses.

Elsewhere in the region, the Sensex in Mumbai gained 2.8 per cent to 9,257.25, while in Singapore, shares rose 4.8 per cent to 1,766.08, reopening for trading after two days of holidays for the Lunar New Year.

Shares in Pakistan were trading 3.7 per cent higher at 5,156.59.